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particularly in the north and south divisions. At the time the trust was formed, the price in the north and south divisions was one dollar per thousand feet. The price was now raised to $1.50 per thousand feet.

Complaints of the citizens became so numerous that the Citizens' Association of Chicago took up the matter. The result was that George Hunt, at the time Attorney General, commenced quo warranto proceedings in the name of the People of Illinois on the relation of Francis B. Peabody, then president of the Citizens' Association, to oust the Gas Trust Company from the exercise of those powers in its charter above mentioned, namely the power to buy and sell the stocks of other gas companies located in Chicago, and to control those companies.

The case was carried to the Supreme Court, and in 1891 the latter affirmed the decision of the lower court, declaring that not only had the company no right to purchase the shares of other companies, but that it was against public policy to permit any plan or scheme to be carried out by which the four companies could be brought under one management. The effect of such acts was to produce monopoly, a condition declared by the court to be unlawful. Following the decision of the Supreme Court the price of Chicago Gas Certificates dropped from about 60 to 34. The result of this litigation was practically fruitless, for the reason that the matter was not followed up after judgment of the Supreme Court was obtained.

To quote Mr. Bard's report in the Chicago Economist, May 5, 1894: "The trust met the decision by simply ordering the Philadelphia company to surrender the shares to the sub-companies and receive in exchange new shares made out in the name of the Fidelity Insurance, Trust and Safety Deposit Company, and within a week after the filing of the Supreme Court decision renewed its contract with the Philadelphia company. Immediately after (December, 1889,) the sub-companies declared dividends amounting to $1,000,000, which were paid to the Fidelity Company, and by it to the Chicago Gas Trust Company and then disbursed among the stockholders. This was the first dividend declared by the Chicago Gas Trust Company.

"Two months after these events, or in February, 1890, Francis M. Charlton purchased ten shares of the Chicago Gas Company stock for the express purpose of renewing the litigation against the company, and on March 14, 1890, filed a bill in the Circuit Court of Cook county asking for the appointment of a receiver for the company. This action was contested partly on the ground that 'the general rule is that the corporation should bring such suit, as it is for its benefit that such action should be taken.'"

Six days after the filing of this bill the board of directors of the Chicago Gas Trust Company unanimously passed a resolution providing that all right to the shares of capital stock in the sub-companies be transferred to the Philadelphia Company, on condition that the latter company hold them in trust for the owners of the mortgage bonds of the sub-companies and for the stockholders of the Chicago Gas Trust Company. This condition was apparently accepted, for on March 22, 1890, a new deed of trust was executed to the Philadelphia Company, the precise terms of which are unknown, it being claimed by the representatives of the Chicago Company that only one copy

exists, and that is in the possession of the Philadelphia Company. A circular subsequently issued by the proxy-holders shows, however, that all the socalled new deeds of trust were substantially the original deed of October 15, 1887, 1edated.

In the meantime, and while a decision was pending in the Charlton suit, the company changed its name from the Chicago Gas Trust Company to the Chicago Gas Company. This occurred in April, 1890.

Judge Collins decided that Charlton had no standing, but he also ruled that the company in transferring all right in the stock of the sub-companies to the Philadelphia company gave every dissentient stockholder just cause for filing a bill. He therefore issued a temporary injunction restraining the transfer of the stock and restraining the four gas companies from paying money to anybody other than a receiver to be appointed by the court. The Gas Trust Company was also restrained from paying any money to the Philadelphia company or from attempting to transfer the stock held by the Philadelphia company to any person or corporation.

The court pointed out the absurdity of pledging the stock of the trust as security for the bonds of the gas companies when the bonds were themselves a prior lien on the property. On the 2d of June, 1890, George R. Davis was appointed receiver of the Chicago Gas Company, but on the 27th of the same month, Charlton's consent to the discontinuance of the suit having been obtained, the receiver was dismissed.

At a meeting of the stockholders of the Chicago Gas Company held in Chicago April 9, 1891, it was decided to surrender its charter and ask the Fidelity Insurance, Trust and Safety Deposit Company of Philadelphia to issue its own certificates, to the extent of $25,000,000, to the stockholders of the Chicago Gas Company, which should entitle each stockholder to his pro rata proportion of the stocks of the several sub-companies, subject to the pledge to secure the bonds.

The original deed of trust, dated October 15, 1887, was, and still is, recognized as in force, notwithstanding the decision of the Supreme Court, filed November 26, 1889, that all acts done by the trust toward the accomplishment of its object of combining the gas companies under one management was illegal.

After dissolution of the corporation and adjournment the meeting reassembled, ratified the action of the trust and resolved that E. C. Benedict, E. J. Jerzmanowski and Walton Ferguson be nominated and appointed attorneys and agents for the individual property owners, to act for them in all matters pertaining to the management of the property. The meeting further ratified and confirmed any and all things that Messrs. Jerzmanowski and Ferguson may do in the management thereof. It was declared that a majority of this committee should have power to act and to fill vacancies in its number.

The following is a copy of the certificates of equitable interest in the various gas companies:

"Certificate of the Fidelity Insurance, Trust and Safe Deposit Co.

"No.......

66

cago Gas Company.

shares issued upon surrender of certificates of the Chi

is entitled to

"This is to certify that shares (being a proportionate part of the total of 250,000 undivided shares) in and to the stocks of the Chicago gas companies, which are deposited with and held by the Fidelity Insurance, Trust and Safe Deposit Company, under the terms of certain deeds of trust to this company, bearing date of October 15, 1887, and March 22, 1890, and subject to the provisions of such deeds of trust and the rights and powers of the trustees thereunder.

"The registered holder of this certificate will be entitled to receive the proportionate amount of all dividends collected on said stocks by the Fidelity Insurance, Trust and Safe Deposit Company and distributed as such under the terms of the trust. The voting power on so much of the stock as is represented by this certificate may be exercised by the registered holders thereof, with power of substitution, subject to the rights and powers of the trustees in said deeds of trust.

"This certificate is transferrable by the holder thereof, in person or by proxy, upon the transfer books provided for the purpose, upon surrender of this certificate, subject to the terms hereof. This certificate is not obligatory until countersigned and registered by the Central Trust Company registrar. "Witness the corporate seal of the Fidelity Insurance, Trust and Safe Deposit Company.

"Philadelphia, Pa.

President.

Secretary."

June 11, 1891, the stringent anti-trust law elsewhere referred to was passed, with especial reference, it is believed, to this very combination of the Chicago gas companies.

Six days later, however, Hempstead Washburn being mayor, the city of Chicago, in direct opposition to the spirit and purpose of this law, entered into a written agreement with each of the seven gas companies composing the trust. (See Ketcham affidavit in Appendix.) These companies, the Chicago Gas Light & Coke Company, the People's, Consumers', Equitable, Hyde Park, Lake and Suburban, agreed to give the city three and one-half per cent. of their gross receipts and to light and take care of the street lamps, if paid within thirty days of the time when the bills were presented. This amounts to a charge of about a dollar a thousand feet, after allowance is made for the care of the lamps. One dollar was also to be the price for public buildings. The price to private consumers was to be $1.25 until January 1st, 1893, and then fall five cents a year, until it reached one dollar in 1897.

The compact thus closes: "The above agreement on the part of said gas companies is to be enforced and binding upon said companies so long as the existing franchises are recognized and not attacked by litigation on the part or at the instance of the city of Chicago and so long as those of said gas companies which are authorized to extend their mains throughout the city of Chi

cago are not prevented by the city of Chicago from making such extensions in the territory which has been or may be annexed to said city, as in other territories."

The financial results to the city of this compact will be considered later. It is here interesting to note, as illustrative of the union of interest among these companies that legally were under obligations to compete with each other, that in the signatures to the above agreement C. E. Judson appears as the president and C. F. Bryant as the secretary of the Consumers', Hyde Park and Lake companies, while Mr. C. K. G. Billings appears as the vice president of the Chicago Gas Light & Coke Company and president of the Suburban and the People's companies, and Geo. A. Yuille signs as the secretary of the Chicago Gas Light & Coke Company and of the Suburban and Equitable companies.

The next move on the chess board was the refusal of Mr. Henry C. Rew to pay the price charged by the Chicago Gas Light & Coke Co., at his residence, 2619 Prairie Ave., on the ground that is was exorbitant and due to the illegal suppression of competition. Mr. Rew was a practical gas engineer and large owner in the Cicero gas plant, just west of the city limits. He claimed that 80 cents for illuminating gas, as 75 cents for the same when used for fuel purposes, would yield over eight per cent. on the cost of all the plant.

Comparing the ability of the Chicago Gas Light & Coke Co. to sell gas cheaply in 1893 with their ability to do so in 1887, when they made nine per cent. by selling at one dollar, Mr. Rew not only called attention to the large improvements in processes of manufacture and reduced cost of materials, in the previous six years, but emphasized the diminished cost of distributing the gas because of the great or density of population. He showed that the output of this company had increased from about 1,250,000,000 feet to about 1,900,000,000 feet, or about 50 per cent., and the number of meters from 26,000 to about 40,000, also about 50 per cent., while the company had been obliged to increase its miles of mains only from 225 to 297, or about 30 per cent.

It was at this time that the important affidavit of Mr. James Burtis, treasurer of the company from its start until 1887, and still a resident of Chicago, was introduced. He closed his affidavit as follows: "Said company, if operated and managed as a separate and independent company, and paying the present rates for labor and material and using the same methods employed by it in 1887, could produce and supply gas to its consumers in the north and south divisions of said city of Chicago at the price of ninety cents per thousand cubic feet, and out of its receipts pay the cost of such production and supply, pay its expenses, and still have for distribution among its stockholders dividends which would amount to about nine per cent. of the entire cost of its pipes, plant and property; and this affiant is informed, believes and so states, that there are other and more modern processes for the manufacture of gas by which its manufacture can be made at much less cost, and that by the use of such processes said company could supply gas at much less than the above sum per thousand cubic feet."

Mr. Rew thus closed his petition to the Circuit Court of Cook county, in chancery, October term, A. D. 1893:

"Forasmuch, therefore, as your orator is without remedy, save in a court of equity, where matters of this nature are properly cognizable and relievable; to the end therefore that the said defendant, the Chicago Gas Light and Coke Co., may full, true, direct and perfect answer make, but not under oath, its oath and the oath of its officers being hereby expressly waived, pursuant to the statute in such case made and provided, may it please your honors, not only to grant unto your orator a writ of injunction issuing out of and under the seal of this Honorable Court, directed to the said Chicago Gas Light & Coke Co., enjoining and restraining it, its officers, agents, servants and employees from removing the gas meters, or either of them, or discontinuing the supply of gas to your orator's said residence, or shutting off the gas therefrom at No. 2619 Prairie Ave., and also a writ of summons, issued out of and under the seal of this Honorable Court, directed to the said defendant, the Chicago Gas Light and Coke Co., commanding it by a certain day to be and appear before this Honorable Court then and there to answer the premises, and that the reasonable and fair price to be paid by your orator for said gas may be fixed by the decree of said Honorable Court, and that your orator may have such further and other relief in the premises as shall be agreeable to equity and to good conscience, and your orator will ever pray, etc.

(Signed) HENRY C. REW."

Mr. Rew, however, finally dropped the matter.

CHICAGO ECONOMIC FUEL GAS COMPANY.

"In 1890," says Mr. Bard, "the Chicago Economic Fuel Gas Company was incorporated to manufacture and sell fuel gas, and by ordinance of the city council of Chicago was granted permission to lay pipes and mains for that purpose upon the express condition that it would not sell, lease or transfer its franchise and privilege to any other gas company, or enter into any combination with any other company concerning the price to be charged for gas. This was identically the same condition imposed upon the Consumers' and the Equitable at the time their franchises were given to them. The authorized capital stock was $5,000,000, divided into 50,000 shares of $100 each, all of which was fully subscribed, and upon which $750,000 was paid in during the following year, 1891. The franchise originally granted to this company gave it the right to lay mains for fuel gas only, but by an ordinance passed July 13, 1891, the addition l right to lay mains for illuminating gas was granted it. Part of the conditions were that the price of illuminating gas should not exceed $1.10 per 1,000 feet and that of fuel gas 60 cents; that the city should receive 3 per cent. of the gross revenue from the sale of illuminating gas and 5 per cent. for fuel gas; also that the price of gas for street lamps should not exceed $17.50 per annum. The franchise was for 25 years, the city reserving the right to purchase the plant at the expiration of twenty years at an appraised valuation. On February 27, 1892, announcement was made in New York, presumably inspired by Mr. E. C. Benedict, that a majority of the stock of this company had been purchased by a syndicate

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